Through his character Polonius, William Shakespeare offered financial advice in his classic play, Hamlet. “Neither a borrower nor a lender be” was an admonition against borrowing from or lending to a friend. Tables 9.1 and 9.3 show that not many firms follow this advice. Most use at least some debt in their capital structures. What are some of the pros and cons of using leverage?

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TABLE 9.1 Capital Structures of Well-Known Companies in 2020 Value of Outstanding Debt ($ billions) Value of Outstanding Equity (5 billions) $1 $911 29 386 31 282 6 580 51 31 Company Alphabet Johnson & Johnson Procter & Gamble Facebook General Electric General Motors 99 105 % Debt 0% 7 10 1 66 77 % Equity 100% 93 90 99 34 23 Total Capital (5 billions) $912 415 313 586 150 136 TABLE 9.1 Capital Structures of Well-Known Companies in 2020 Value of Outstanding Debt ($ billions) Value of Outstanding Equity (5 billions) $1 $911 29 386 31 282 6 580 51 31 Company Alphabet Johnson & Johnson Procter & Gamble Facebook General Electric General Motors 99 105 % Debt 0% 7 10 1 66 77 % Equity 100% 93 90 99 34 23 Total Capital (5 billions) $912 415 313 586 150 136